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Weibo Corp. Tripled Q3 Earnings

China-based social network operator Weibo (NASDAQ: WB) reported third-quarter results early Tuesday morning. Management celebrated a "virtuous cycle of growth" as the company delivered strong growth in many important business metrics.

Here's a closer look at Weibo's latest report.

Weibo's third-quarter results: The raw numbers

What happened with Weibo this quarter?

  • Weibo added 79 million net new accounts compared to the year-ago period, landing at 376 million monthly active users. Ninety-six percent of the platform's users accessed it through mobile devices in September.
  • Management's revenue guidance for the third quarter topped out at $300 million, a bar Weibo cleared with plenty of margin.
  • A "Weibo Light" platform was released in the third quarter, intended to give Chinese users with slower or less reliable internet connection a better social network experience.

For the fourth quarter, Weibo expects net revenue of roughly $360million, up from $213 million a year earlier. This forecast assumes stable exchange rates between the U.S. dollar and Chinese yuan through the end of calendar year 2017.

What management had to say

"We have made a number of breakthroughs in the areas of expanding ad customer base, improving ad system efficiency as well as developing innovative marketing solutions," said CEO Gaofei Wang in a prepared statement. "I'm happy to see that we are increasingly creating a virtuous cycle of growth on Weibo by translating user base expansion and engagement growth into stronger monetization capabilities."

The theme of user engagement also popped up many times in management's conference call with analysts. The company is revamping its content feeds, using machine learning and data mining tools to improve the user experience. The effort appears to be paying dividends, as the average Weibo user engaged with 10% more content in this reporting period than in the second quarter.

Looking ahead

Weibo is exploring a larger portfolio of video-based content and advertising, hoping to drive those user engagement numbers even higher. The company is also busy working up partnerships with Chinese smartphone makers, mobile networks, and ad partners in order to put the Weibo platform in the hands of more users. For example, e-commerce giant Alibaba (NYSE: BABA) nearly tripled its Weibo ad spending year over year to account for 8% of Weibo's total third-quarter sales. The partnership extends outside the pure advertising arena, too, as Weibo's core service includes a mobile payment feature powered by Alibaba.

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Anders Bylund owns shares of Alibaba. The Motley Fool recommends Weibo. The Motley Fool has a disclosure policy.